There is no possibility of achieving a sustainable and just society
unless there is huge and radical change from the present economy. In the present economy we all compete against each other to take as much wealth as possible. A very few end up getting most of the wealth, and the power
to decide what will be produced. They decide this solely in terms of what
will most enrich themselves. Thus many urgent
needs are ignored. There is pursuit of limitless increase in wealth;
i.e., economic growth is the supreme goal.(For the
detail see The Economic System: A Radical Critique.
)

In a
satisfactory economy we would apply the
available productive capacity to giving to all the highest possible quality of life in ecologically sustainable ways. This means economies must be
mostly small, localised,
basically cooperative, and under social control ---
and there must be no growth.

The principles.

What do we want
from an economic system?

-It
should provide all with sufficientbasic goods and services for a comfortable and
pleasant material, social and cultural lifestyle.

-There must be no economic growth. We
are already beyond sustainable levels of production and consumption.
Global ecological sustainability is not possible unless there is dramatic
reduction in the present levels of production and consumption going on.

-So lifestyles must be very frugal and
self-sufficient. The goal cannot be affluent or luxurious lifestyles.
The planet cannot sustain anything like the present lifestyles taken for
granted in rich countries.

-There
must be economic justice; i.e., a
reasonable level of equality with no one deprived of necessities for a good
life.

-The
basic unit must be the small, highly
self-sufficient localised economy. There
can be a role for (much reduced) national and international economies, but for
ecological and resource reasons there cannot be a globalised economy. All sectors, household, suburban, town, regional and national
must be highly self-sufficient.Thus there must be much social regulation and planning of economic affairs,
infringing as little as possible on important freedoms. Market forces
cannot be important determinants of economic activity.

-The
social control can and should be exercised via participatory
local assemblies, not via a centralised,
authoritarian and bureaucratic state.

-The
criteria determining economic processes and decisions must include all factors
which affect the quality of life and eco-systems; i.e., justice, morality,
ecological sustainability and social cohesion. They must therefore
to include far more than what will maximise business
profits, incomes and GDP.

-There must be a high level of cooperation,
collectivism and mutuality. The basic philosophy cannot be
Liberalism. It is not acceptable that the most energetic and gifted can
be free to get as rich as possible without limit, taking wealth others need.
(However there can also be much individual freedom, including private firms.)

-We
would go directly to appropriate development.
The indiscriminate, eventual trickle down approach is not acceptable. It allows productive capacity to go into
producing mostly things that are not very important and which mostly enrich the
rich. We would focus first on what most needs doing.

-None of this is possible without enormous
value change. People must want to be collectivist, to give, to see
their community thrive and to live in materially simple ways. The economy
of The Simper Way cannot work without active, responsible citizens.
The situation will encourage and reward good citizenship.

The slow transition

The following
ways are very different to those we have today so it is important to see them
as long term goals to which we might move fairly
slowly and in small steps. The main concern in this document is not how
we might get there, but where we have to try to eventually be. (For a
discussion of the transition processÉ)

__________________________________________________

Contents:

1.FAR LESS PRODUCTION AND CONSUMPTION AND NO GROWTH.

2.MOSTLY
SMALL, LOCAL, HIGHLY SELF-SUFFICIENT ECONOMIES.

3.SOCIAL
CONTROL OF THE ECONOMY;NOT DRIVEN BY MARKET

FORCES.

4. MOSTLY
COOPERATIVE SYSTEMS

5. THE
LARGE MONEY-LESS DOMAIN;
FREE GOODS

6.THE
REMAINDER OF THE ECONOMY.

7.THE
LONG TERM FUTURE?

8.MONITORING, MEASURES

9. MONEY,
FINANCE, CAPITAL

10. SOME
OTHER ISSUES

11. ECONOMIC
THEORY

1.
FAR LESS PRODUCTION AND CONSUMPTIONAND NO GROWTH.

The most important
fault in the present society is the fact that levels of production, consumption, affluent living standards economic output are far
beyond sustainable levels (For the detail see The Limits to Growth.) This
is the major cause of the big global problems and a sustainable society is not
possible unless we cut the resulting levels of resource use and environmental
impact to perhaps 10% of the present rates. Most people fail to grasp the
magnitude of the overshoot. A number of very important implications
follow from an understanding of this basic point, especially the fact that a
sustainable society cannot have affluent
living standards and it cannot have
economic growth.

Living standards cannot be affluent.

In view of the
limits to growth analysis a sustainable society cannot
possibly be an affluent or consumer society. We might have to live on per
capita resource use rates that are around 10% of today's rich world
levels. This does not mean hardship or deprivation. It means being
content with what is sufficient for a high
quality of life, deriving life satisfaction from other things than consuming,
e.g., from community activities, arts and crafts, gardening and personal
development. Many sources of satisfaction can be found in living more
simply, communally and self-sufficiently and indeed the quality of life can be
higher than in consumer society. (See TSW: Benefits.)

We will move from
the
maximiser – taker
mentality with its
focus on
efficiency
and having the best, to a concern with effectiveness and
sufficiency, where we will be content with products and services that are good enough. We will not expect the best
or the most expensive or luxurious things. However most of our goods and
services will probably be of much higher quality than we get from the
supermarket. They will be well-made by people we
know and who enjoy doing good work. They will be designed to last and to
be repairable. Today almost no goods are made to last or to be
repaired. For instance furniture is usually flimsy and shoddy, the
buttons and cases on electronic items break down, cars have no bumper bars.
Our new local firms will therefore mostly produce goods with lower lifetime
dollar costs, as well as very low resource and ecological costs.

Far less work and production will take place.

In consumer society
there is a vast amount of more or less unnecessary production going into things
like advertising, packaging, transport, construction, cosmetics, waste
disposal, sewage disposal, shipping, insurance, junking shoddy goods that don't
last and can't be repaired, roads and freeways, unemployment agencies, TV and
other trivial entertainment, and provision of
welfare
for people
who crack up and become mentally ill or take to alcohol or drugs. We will
eliminate much of this. We will need far less professional/artificial aged
care, financial advice, paid entertainment, professional government, health
care, professionals and car repairs. We will save billions by not having
to produce arms any more! (Ébecause there will not be
resource struggles.)

In addition many of
the things we do need will be produced in far less resource-expensive ways, for
example we will not need to produce trucks to bring food to cities. There
will be far less government. There will be much less crime and therefore
less need for courts and prisons. Far fewer people will break down so we will
need far less counselling, medical treatment and
welfare
.

Many shops would
open only two or three days a week. If you need a pair of shoes you might
get them on Tuesday or Saturday. In familiar neighbourhoods some shops and local firms might operate without shop assistants, via stalls
where you serve yourself, further reducing the amount of work that needs doing.

All this means that
at present we work about three times too hard. In the new economy the GDP
will be a small fraction of the present size. Deciding what not to produce
anymore might be difficult but will be worked out via participatory community
discussions (see below.) Remember that people will understand that
sustainability requires large reductions in production and consumption, and
they will have other sources of satisfaction than consuming, so reducing the
economy will not be as difficult as it might seem at first.

The average
monetary income per person would be much lower than it is now, people would be
far less wealthy in conventional dollar terms, but the quality of life of all
could be far higher than the average now. One will need very little money
to live well in The Simpler Way.

Reducing the GDP
does not mean that the
living standards
of the poorest must sink even lower
than they are now. The quality of life people experience does not have to
be connected to their income or to the GDP. The solution is not primarily
to do with redistribution of income. There would not have to be a high
level of equality in income or monetary terms, because these would not affect
the quality of life much. The goal must be to give all people access to all the things that make a high
quality of life possible regardless of income, such as community workshops,
festivals, free fruit from the commons, a livelihood involving worthwhile work,
great concerts, skilled artists, a caring community and a leisure-rich
environment.

Fewer models.

In many fields we
would work out what is the minimum number of models that makes sense, e.g., for
cars. (Why is there any need for more than two kinds of soap, a block and
liquid, and one kind of sock for men?!) However at the
level of small firms within the town there could be a very wide range of items
produced by family businesses, for example as our locals enjoys creating up many
different jam recipes.

No advertising or marketing!

We will save
astronomical amounts of money, energy and time by having the sense to eliminate
marketing. That is, no effort will be made to persuade anyone to buy
anything. There will of course be an important place for providing
information on goods that are available, and especially on new items. All
of this can be done much more effectively than the present $550 billion global
marketing industry does it, simply by the use of computers. If you want
to buy a new fridge you should be able to look up comprehensive, accurate,
succinct and critical information on the types available. There could be
useful segments within news publications introducing valuable new products
recently developed.

As we move towards
The Simpler Way the need for firms to compete via advertising will
diminish. We will in time get to the situation where our town or region
has just enough bakeries etc. to meet its needs and they are kept effective by
means other than deadly and wasteful competition for limited sales (below.)

Only one or two days a week working for money!

When we eliminate
all that unnecessary production, and shift much of the remainder to backyards,
local small business and cooperatives, and into the non-cash sector of the
economy, most of us will have little need to go to work for money in an office
or a mass production factory. In other words it will become possible to
live well on a very low cash income earned by only one or two days paid work
per week. We could spend the other five or six days working/playing around the neighbourhood doing many
varied and interesting and useful things everyday. You could choose to
work for money five days a week, if for instance you were a specialist doctor.
You would earn more money, but you would need to buy more whereas others would
be getting more things in exchanges that did not involve money.

No growth!

A zero-growth or
steady-state economy is absolutely crucial for a sustainable world. . (See The Limits to
Growth.) There must be no economic growth. The amount being
produced is already far beyond sustainable levels. We would produce only
as much as was needed to provide all with a good quality of life, and we would
always be looking for ways of reducing the amount of work and resource use.

Few big firms or transnational corporations would be needed.

The general
principle will be to make productive units as small as we can and to locate
them in as many small areas as possible, to minimise transport distances, travel to work, and distribution systems. Most
things can be made very efficiently on a small scale, especially when we take
into account the increase in morale that can come in small cooperative firms
mostly serving their locality.

Those large
enterprises that are appropriate, such as steel works, railway equipment and
buses would best be owned and run by society as a whole, to provide basic
materials and services to society. Fifty years ago railways, power, telecommunications, water etc., were
publicly owned. The operations of the bigger enterprises would be fully
open to public observation and control, with their major policies set by
referenda.

Much craft production

Many things would
be produced in very small firms, in craft ways. The main reason for this is
that craft production is enjoyable. Remember that the volume of
production in a frugal steady-state economy would be much lower than it is now,
so people who love making pottery, furniture, clothing, toys etc. might provide
all we need via hobby-produced, hand-made items. Production of things
like crockery and furniture would have to do little more than replace breakages
and wear. Of course it would make sense for some things to be mass-produced in
factories.

The greatly reduced economy

The total amount of
producing and consuming going on in the new economy will be a small fraction of
the amount in the present economy. Many luxurious, wasteful and avoidable
things will not be produced; some whole industries will be eliminated, e.g., sports
car production and motor racing. Some essentials will be produced in much
less resource-intensive ways, e.g., food. This will mean that the amount
of resources available for important things such as medical research and
cultural activities could actually be much greater than at present.

2.MOSTLY SMALL, LOCAL, HIGHY
SELF-SUFFICIENT ECONOMIES.

In a world of
scarce resources, especially fuel for transport, we will have no choice but to
produce most of the things we need in and around our towns and neighbourhoods. Relatively few goods will travel
significant distances, because there will not be the energy and resources to
transport them. This means the end of globalisation.
A sustainable economy for all the world's people cannot be a globalised economy.

Economic
self-sufficiency should be seen in terms of concentric circles. In the centre will be the most important economic and social unit
of all, the highly productive and self-sufficient household. This will be
more important in most people's lives than their
career
. Outside
this will be the neighbourhood, then the suburb or
town where less frequently needed goods and services will be available, e.g.,
doctors. Then the town's surrounding area will contain a dairy, timber
plantations, grain and grazing lands, and some of the factories that would
supply into the surrounding region, e.g., producing fridges and radios.
Some of these items would be exported out of the region. Much less will come
from the state and national economic sectors, and very little from overseas,
perhaps things like some high tech medical or computer equipment.

So the basic
economic unit will be the local economy,
the suburb or town. Most of the things we need in our everyday life will
come from at most a few kilometres around where we
live. Most of us will get to work on foot or on a bike, although a few
will go a little further, in buses or trains. Because we will need very
little transport many roads will be dug up increasing space in cities for local
gardens, orchards and forests.

Sectors of the new Economy

One of the
(overlapping) sectors of the new economy would still use money. In
another market forces might be allowed to operate (although in the long term
future we would not need the market; see below.) One sector would be
fully planned and under participatory social controlled (e.g., for provision of
water and power). One would involve
community cooperativeslf . . One large sector would not involve
money. It would include household production, barter arrangements, mutual
aid, working bees, cooperatives, gifts, i.e., just giving away surpluses, and
the totally free goods from the commons, e.g., public orchards, clay pits, herb
patches and woodlots. As many of these as possible would be crammed into neighbourhoods and towns and just outside them, run by
working bees and committees, to provide a wide range of important goods and
services, including fruit, nuts, timber, herbs, reeds, meadows, honey, premises
for little businesses, store sheds, meeting places, libraries, and especially neighbourhood workshops.

Many of our firms
will produce at higher dollar cost than we would have to pay at the
supermarket. They could not beat the transnational corporations
which have mass production economies of scale, can import the cheapest
goods and can exploit cheap third world labour.
But the resource and ecological costs of supermarket goods are extremely high
and will not be affordable in a sustainable world. For example it will
not be possible to have food items travelling on average 2000 km. We will have to pay much more for some
things but this will not be important because we will not need to earn or spend
much money and we will understand why it is desirable to pay the higher
cost. That hand-made table will last a lifetime, and purchasing it helps
to keep the town's carpenters in their livelihoods. If some of them leave
town there will be fewer people for working bees and concerts.

Taxes.

The main form of
tax payment would be giving time to the working bees which build and maintain town infrastructures and provide our services. Only a
little tax in the form of money would be needed to pay for maintenance of town systems.

Most tax would be
levied and spent locally, i.e., not via the national government, 9which will
have far fewer functions to pay for) Towns would work out their own
arrangements whereby individuals might pay some or all their tax through extra
contributions to working bees. Some communities would also have voluntary
taxes, i.e., those who think a proposed project would be desirable contribute
to it and others might support some other project some other time.

3. SOCIAL CONTROL OF
THE ECONOMY;

NOT DRIVEN BY MARKET FORCES.

We cannot have a
satisfactory economy unless we make sure that what is produced is what should
be produced, that people have their needs met, that social cohesion and morale
are kept in excellent condition, that the environment is cared for, and that
the right things are developed. A free enterprise or capitalist economy will not
do these things. Markets ignore need. They allocate scarce things to the
rich and do not develop the most needed industries. Desirable outcomes
are not possible unless there is much social control over the economy, i.e.,
careful discussion, deliberate, rational decision making and regulation.

Obviously these
assertions contradict currently taken for granted conventional economic doctrine which asserts that as much as possible should be
left to the free market. (The problems the market system generates are
central in the critique of the present economy; see The Case Against the Market,
http://socialsciences.arts.unsw.edu.au/tsw/MARKET.htm.) In the past we have not
been very good at running economies without market forces but we must now
master the process. It will be argued that the control and planning must
be exercised through our open and participatory local assemblies, not state
bureaucracies, and that the task will be made much simpler by the fact that the
economy will be much less complex and will not be growing.

All relevant factors will therefore be taken into account.

Some of the worst
aspects of the present economy are due to the fact that only one factor is
taken into account in economic issues and decisions, i.e., whatever will maximise monetary benefits. This is totally
unacceptable. Millions of people die every year because the provision of
food and water is determined not by whether or not they need these things but
by what will maximise the profits of those who supply
them. In a satisfactory economy whether or not something should be
produced and who is to get it should take into account considerations of
morality, social cohesion, justice, rights, needs and ecological
sustainability, and all of these considerations should take precedence over
whether profit can be made. By allowing market forces and profit maximisation to settle issues, this economy allows
producers to completely ignore all these other important factors, and therefore
to ignore many of the costs of production. The cost of the noise from the
factory therefore has to be paid by someone else. What's more, the most
relevant considerations (e.g., effects on the environment and social cohesion)
cannot be measured in dollars, so weighing costs and benefits and providing the
right trade-offs can be only be done by deliberate, messy, social decision
making.

How will we exercise the control?

Few if any of us
would want the social control and regulation of the economy to be exercised by
big, authoritarian, centralised state bureaucracies,
but that is avoidable. A sustainable and satisfactory society in a world
of very limited resources will have to be made up of many small and highly
self-sufficient community economies. These will have to be run by participatory democracies – they can't be
run effectively any other way. They will not make viable decisions unless
the people familiar with that situation, and who will have to make the
decisions work, are the ones who make them. There will be few paid
bureaucrats or councils, because in a world of scarce resources we will not be
able to afford much paid government. Most policy formation and management
of
public works
will (have to) be carried out by local citizens,
committees and town assemblies, and via voluntary working bees. Fortunately
the situation we will be in (smaller, zero-growth, localised economies) will make it easier for the social control to be exercised via
participatory democratic processes such as town assemblies.

Many and possibly
most of the economic activity would not need any formal control. Informal
discussion would sort out, for instance, whether we planted too any tomatoes
last year.

It is important to
distinguish between the near and long term future. Eventually we will
probably have a fully planned and socially controlled economy that will
function to provide well for all routinely and with little attention, without
wages, profits or private firmsÉbecause we will have developed ways of easily
producing what is needed via rationally organised systems. (This is of course how the economy within the household runs
now.) But in the short-term future there will probably still be a
considerable role for market forces, profits, private firms and different
wages, but within limits and conditions we set.

So, in the near future we will
seek to organise and control only the most important
basic activities we all need, (i.e., we will set up Economy B within the old
economy; see below) and many private firms will continue to operate according
to market principles, within the remnant and diminishing old Economy A.
For example the kinds of bicycles on sale might be left entirely to the
market. Local market days might enable individuals and families to sell
small amounts of garden and craft produce. In other words market forces might
even continue to make most of the economic decisions – but none of the
important ones! We would obviously not let it determine whether some
people were unemployed.

We would have the
capacity, and the intention, to intervene whenever undesirable things were
starting to happen in this market sphere. Market forces would never be
allowed to settle the distribution of
income or the access to livelihood or town development (although they might be
allowed to have considerable influence.) The people of the town would have
ultimate control over these issues through their political system, especially
town meetings. For instance if it became clear that there were too many
bakeries they would have to work out the best solution for all concerned.
This might include helping to shift some people into other ventures the town
needs. (The town will have its own banks and panels of experienced
advisers and working bees to help its firms run well; see below, and see
Mondragon.) The town would not tolerate any of its members being dumped
into unemployment or bankruptcy by market forces, nor the establishment of a Wal-mart that threatened to
ruin the town's many small businesses. (We would refuse to buy from it.)

Even if
satisfactory ways of exercising this social control are not easy to find, we
must work them out because the welfare of our town and its people is at stake
here. It's our town, it must work well or we will all be sorry, a failing
business is a waste of resources, we must look after
each other, including the person running that bakery. Even if it is a
private firm, it's our town and we need a good baker. The basic
orientation would therefore be friendly and helpful. Above all we will
make the decisions and determine our fate, not leave it to the market (i.e.,
the wishes and
effective demand
of richer people.)

This means we will
be in a position to retain or establish some firms that are important for the
town even though they would not survive in a free market situation. These
actions sometimes protect and subsidise, and
therefore impose costs. Goods would be cheaper if purchased from a
transnational corporation which can minimise prices by importing from China. But these are
among the costs we will be willing to pay in order to maintain a good town.

Obviously these
actions will not be possible unless people become much more socially aware and
collectivist in their outlook than they are now, and prioritise the town's welfare over low prices.

Our many small
private firms would not be part of a capitalist economy because they would best
be regarded as the tools people work with to gain a modest, stable income and
thus a secure livelihood. These little firms would not involve investing
capital in order to accumulate capital in order to constantly increase
investments and wealth.

The overwhelmingly
dominant neo-liberal ideology insists that the best way to run an economy is to
leave everything to market forces and not to try to cooperatively control
economic affairs –
that's socialism and we all know it doesn't
work
. The issue of how we could organise a
good economy independent of market forces is discussed at length below but it
is appropriate to note here that for bigger enterprises a highly satisfactory
model is the
mutual
or cooperative, whereby those who want a product or
service simply form an organisation to provide this
to all without making any profit. There were many of these twenty years
ago, e.g., for roadside repair of cars, and for home building loans.

What about the
criticism that having everyone making the decisions risks
populism
and that
good government must involve selection of leaders who don't blindly follow
popular opinion but ask themselves what would be best for society? We are
talking about a situation in which everyone is acutely aware that the decision
to be made is usually about what would be the technically correct option for
them all, e.g., how many bakeries do we need, and what can we do about it? Strong disagreements will still occur
from time to time, but the direct connection between your vote and your welfare
will tend to make you behave sensibly. We will quickly learn that it is not a good idea to be hot headed or to
engage in personal abuse. The
situation will force us to think collectively; the question will be, given our
scarce resources and our need to deploy them well, and given the wishes of the
present bakers who are our friends and neighbours,
how should bread supply best be organised? Thus the chances of irrational mob rule
etc. are likely to be low. (For
more detail see The New form of Government.)

Provision of livelihoods.

One of our top
priorities will be to ensure that everyone has
a livelihood. This is very important. The conventional economy
sees no problem in allowing those who have most wealth and power to take or
destroy the business, markets and livelihoods of others, and thus accumulate to
a few the wealth that was spread among many. Its fundamental mechanism,
the market, constantly and inevitably worsens this problem. Globalisation is essentially about the elimination of the
livelihoods of millions of people and the take over of their business by a few
giant corporations. As a result inequality is rapidly increasing. A
satisfactory society will not let this happen. One of its supreme
priorities will be to ensure that all have a livelihood, and clearly this is
only possible if local communities have control of (at least the essentials of)
their own local economic development and can operate contrary to market forces.

It would be
possible and desirable for many and possibly most enterprises to be to be
privately owned and run by families and cooperatives. People in these
firms would be able to enjoy running their own venture just how they wished,
but this would be within the formal (and moral) limits that would both prevent
them from doing things we didn't want and that would help them to thrive.
These
private
firms would be seen as part of the local machinery
that routinely helps to supply that relatively small and constant volume of
products and services we all need while providing workers, managers and owners
with a stable income and a satisfying livelihood and a sense of making a
worthwhile contribution.

T these private
enterprises would not be elements of capitalism. They would best be
thought of as the tools which people used to make their social contribution and
draw a constant, sufficient income. They would not involve investment of
capital by those who need do no work, to make money, to invest again, and so would
not be remnant elements of a capitalist economy.

Although most firms
might be privately owned, we would regard the economy as ours; i.e., as
arrangements and institutions which the town
owns
and runs in order to
provide itself with the goods and services it needs and to provide its people
with livelihoods. The more we move in this direction the more
collectivist
our society could become. (It should be stressed that this term
does not imply coercion by Big Brother; in The Simpler Way vision it means strong
desire to maximise the welfare of all.).

There would be no poverty or unemployment.

It should not need
to be said that there will be no poverty and
unemployment. These are inexcusable and easily eliminated -- if that's
what we want to do. They are not found in civilised societies. They do not occur in the Israeli Kibbutz settlements. We
would have neighbourhood work coordination committees
which would make sure that all who wanted work had a share of the work that needed doing.
Far less work would need to be done than at present. (In consumer society
we probably work three times too hard!) The warped economics of
consumer-capitalist society generates a desperate need to
create more jobs
,
but central to The Simpler Way is eliminating most present jobs! That is,
when we stop producing unnecessary things there will be far less work that
needs doing.

In the
present economy the only conceivable ways to reduce poverty and unemployment is
to increase production and consumption and therefore jobs and incomes, or to
redistribute wealth. These are obviously incompatible with the need to
dramatically reduce production and consumption to solve ecological and resource
problems. The Simpler Way solution is not to redistribute wealth, but to organise things so that significant inequalities do not
arise in the first place and so that the
poorest
have abundant
access to the many (mostly non-monetary) things that generate a high quality of
life. In other words the solution is to redistribute productive opportunity.

No work-leisure distinction.

We will have
eliminated the work-leisure distinction. Much of our time will be spent
in useful productive activity, which we will enjoy and would have chosen as a
leisure
activity anyway. Working bees will mostly be
playing bees
. Much leisure activity will be highly
productive, such as gardening, visiting older people, and crafts.

The importance of the handy-man, the
Jack-of-all-trades
.

Most people will
probably choose to do many different productive activities most of the time,
while practising a speciality or profession only part of the time. The
handy man
will be
the backbone of the new economy, able to make and fix most things around the
house, farm and neighbourhood. There would
still be an important place for highly trained specialists, but today most of
them work on tasks that will not need doing so we will not need that many of
them.

Who does the unpleasant jobs?

One of the
injustices built into the present economy is the fact that some people are forced
to do unpleasant jobs. This is never seen as a fault. In addition
the people who have to do the worst jobs get paid the least! The
educational system legitimises job placement; people
who do not do well at school are judged not to deserve access to nice or high
paying jobs. (See Education; The Radical
Critique.)

Ideally our town
assemblies would give a lot of thought to the just allocation of jobs and of
fair remuneration. (Centuries ago people thought in terms of a
just
wage.) As on the Israeli Kibbutz settlements, it would not be difficult
to arrange for job rotation, so that people only do unpleasant tasks for a
short period. Work coordination committees could organise the rosters. Again the fact that it would be an economy producing far
less than at present, and that much production would be in the form of craft
would greatly reduce the difficulty of the problem.

Many of the
unpleasant jobs could be carried out by working bees, enabling all of us do our
fair share. In our present economy, which heaps wealth and privilege on a
few,
professional
people do not have to do a share of the boring, and
unpleasant jobs. In our new villages all will be expected to come to the
working bees. If we all benefit from some job such as cleaning out a garbage
gas tank then why shouldn't we all do our share of such work? Working
bees turn many hum-drum tasks into enjoyable, morale
boosting festivities. If you had to paint windmills every day for a wage
you would surely find it boring, but when it is an occasional event for the
town working bee, with tea, scones, witty comments and musicians on hand, it
isn't drudgery.

Our extensive
monitoring and feedback systems would also deal with the problem of work
justice by experimenting with measures of work satisfaction and difficulty and
unpleasantness. If surveys find that some jobs are experienced as more
distasteful then we would have to think out what to do about this.

Wages.

Another undesirable
aspect of the present economy is the fact that people work for
wages
. That is they take part in production only to get
an income, they are forced to do this in order to survive, they must go to
owners of capital seeking a job and might not be given one, they have no say in
the organisation of the work, they do not own the
things they produce and they cannot participate in their distribution or see
them benefiting others. These are not desirable conditions and in a good
society we would replace them.

But in the near
future we will probably retain many private firms where people work for wages,
although as the town takes more control over its firms workers will increasingly be involved in decisions about how to organise the work process. The many
cooperatives in the town will of course be managed by their workers. In
the long term future it will become clear whether it
makes sense to retain private firms.

What about the rate
of pay? In time we would probably want to move to a standard, equal rate
of pay per hour for all, regardless of skill. (That's how we are
paid
for work in the household economy now, its how we will be happy to be paid for
contributions to cooperatives and working bees, and it is the way many communes
and organisationsorganise payment.) This is not essential for The Simpler Way to work, but it is a
desirable way of organising payment among cooperating
comrades, especially because it contributes to the spirit of equality we should
foster. In a good society those who were more skilled and
intelligent would be happy to work one hour and be paid enough to live well,
knowing that those who were less able were also working just as conscientiously
and being paid the same amount. In other words, shouldn't the measure be how
you try to contribute, not how lucky you are to be stronger or brighter and thus
more able to produce more?

However an
important assumption here is that we will provide properly for the time it
takes for highly skilled workers to learn their trade or profession. The
suggestion is that all training and skill development for socially useful work
would be counted as work time and be paid at the normal rate. In other
words you should be paid by your community for the work you
do to acquire the skills your community will benefit from. When
they graduate professionals and tradespeople would earn at this rate; i.e.,
there is a set hourly payment regardless of skill and regardless of whether the
time is spent learning or practising the skill.
There is therefore no sacrifice or loss of income while studying.
Learning complex skills is then seen as a way of becoming able to do the kind
of work one wishes to do, and to make an important contribution. (This
would also make sure that no one chose to become a doctor because of the
prospect of making a lot of money.)

Would there be
insufficient incentive for initiative, effort and conscientiousness, without
sharply differing income rewards? It is being assumed that people would work well, keep up to date and be
conscientious for non monetary reasons, especially because they enjoy their
doctoring or baking and want to be good at it, and because they want to be regarded
as being good at their trade, by their customers and their colleagues..

4. MOSTLY COOPERATIVE SYSTEMS.

The right way for
humans to interact is cooperatively. Competition should be avoided
wherever possible. Contrary to the dominant neo-liberal ideology
competition is a very inefficient way to organise most things. It makes schools and firms run badly, it generates
astronomical levels of waste, and it is not morally acceptable. (For much
empirical evidence on its inefficiency see No
Contest, by A. Kohn.) It certainly appears to be effective because it
does stimulate much effort to be
efficient
and innovative, and it
works very well for richer people, especially for the rich countries in the
global economy! They win the competition for most of the wealth available
in the world.

In a satisfactory
economy many firms would be cooperatives, simply organised by local people to use local resources to produce to meet local needs.
Cooperatives are enjoyable to work in, and are very efficient; typically much more so than private firms. People who run the enterprises they staff tend to be conscientious and
not to strike, and to be thinking about better systems, and no profits are siphoned
off to shareholders.. Many public services would
be provided by cooperatives. Many private firms would in the near future
probably become community cooperatives. The town will run its own
bank and business incubator, with elected boards, for the benefit of the
community (as distinct from being run only for the benefit of
shareholders.) The town would set up many little firms and institutions
it finds it needs, e.g., youth clubs, shoe repair, bee keeping, aged care,
insurance. Often it will make sense for a number of struggling competing
bakeries or fruit shops to come together to form one cooperative to provide for
the town via secure jobs. (If we don't need all the bakers we would work out
how to provide for all somehow, maybe help some to move into some other
coop.) Overall control of the local
economy will be exercised through the town assemblies, where the primary
concern will (have to) be what is best for all. This situation we will be in,
for instance one of scarcity and obvious mutual dependence, will give us very
strong incentive to think and act cooperatively.

The
commons.

Many basic goods
would come free from the many commons, including those planted where roads have
been dug up, and the community workshops, business premises, store sheds,
workshops, meeting places, craft rooms, recycling systems, water catchments and
pumps, windmills and machinery. These will be public assets, operated and
managed by working bees and committees. All might be obliged to give a set minimum amount of time to working
bees that maintain commons.

The town bank and the business incubator.

The local bank and
business incubator will be crucial in giving us control over our own local
economic development. Because we will then have control over our own
savings via our town bank, the town will be able to set up the firms it
want. Business incubators would provide small firms with advice,
secretarial assistance, accountants, tax advice, etc. We would also have panels
of people with expertise in running enterprises, to advise on how firms can be
made as efficient as possible. (See the Mondragon cooperatives system and
bank.)

Consider
the
mutuals
, the cooperatives.

The fact that
large, cooperative not-for-profit firms can function very satisfactorily,
totally independent of market forces, and contrary to the principles of
capitalism, is driven home by a glance at the many mutual and cooperative
organizations that were prevalent a generation ago. There were many
credit unions whose members pooled their savings and hired managers to lend
these at low interest to members for home building. Over time funds would
accumulate enabling very valuable assistance to be extended to increasing
numbers of new participants. The Australian National Roads and Motorists
Association was a mutual organization providing emergency roadside service to
member motorists this way. An excellent example today is the Australian
radio station 2MBSFM. Its members work voluntarily to run a radio station
that broadcasts classical music, accessible to non-subscribers as well.
Consider the characteristics of this organization:

-It is
set up and run by people who want the service.

-It is
not run for profit; profit motivation is therefore not necessary to make this
kind of organisation work well.

-It is
very
efficient
. lt achieves its set goals very effectively, especially in saving its subscribers
the cost of paying out 10%+ of income to shareholders!

-It
does not have CEOs in a position to rig operations to their own benefit, e.g.,
by setting up bonus payment arrangements.

-It is
not open to gutting by CEOs who can see that profits can be raised by dumping
socially valuable operations that don't maximise dividends to shareholders.

-It is
highly democratic, not ruled by a dictatorial board as normal firms are, and
open to all
workers
to have a say in operations.

-It is
not driven by income-maximisation; other goals can be
taken into account and can take precedence over mere money making. For instance
it can help unknown composers to be heard, or subsidise struggling orchestras, or support socially valuable ventures that would not
make much if any moneyÉi.e., it can
cross-subsidise
.

-It
provides and excellent/perfect product!

Clearly the
existence of this organization ridicules the assumption that the best/only way
to do things is according to profit motivation and market forces. Indeed
it is obvious that if it was privatised its admirable
characteristics would be more or less eliminated. (It could of course be
made to generate far more income, so the conventional economist would say it is
very
inefficient
.) These
mutuals
are so
admirable, efficient, and publicly valuable precisely because they are not
private firms, driven by profit for the few who own them.

This could be the
general model for most if not all our middle to large enterprises, i.e., as mutuals run by and serving the needs of their members, or
as public firms serving all (e.g., railways, steel works)Éproviding their
control was not centralised and bureaucratised but kept under open, participatory arrangements. Yet the neo-liberal push
has convinced everyone that its best to leave everything to private firms
competing for profits in the market!

If the mutuals are so good, how come they have died out? The
point is that they were so good that they were
captured, butchered and plundered! Organisations like the NRMA had slowly built up large assets, in resources, skill,
experience, fleets, premises, reputation, users, and funds. These assets
were contributed by users over decades and belonged to the organization, and
were given in order to build an organization that could go on providing mutual
assistance at no profit. At any point in time the current members or
shareholders
were not owners but trustees of the accumulated resources and
organization; their role was to manage them while benefiting from them but to
then pass them on so they could go on benefiting future members. The
members at any point in time had not created or lent or given the assets to the
organization.

Then along came the
neo-liberal globalisers with their sharp eye for
unexploited profit-maximising opportunities, and saw
that there was an opportunity for a killing here. All they had to do was
convince the members to privatise the organization;
i.e., sell it off to a private firm to run for profit.

Note again that the
discussion here is mostly concerned with the development of Economy B. The remnant and dwindling old Economy A
would continue to exist throughout the possibly two decade transition period,
and it will become clearer as time goes by whether we want to completely
eliminate it or retain it as a minor sector in which private firms compete for
sales in a market. One would hope
that as we move to more cooperative ways geared to maximising the public good and the welfare of all a very different culture will develop in
which we choose not to retain the market and its selfish, predatory, maximising and anti-social values. But we might decide to retain the scope
for people who want to set up a firm to sell something via market forces to do
so. Economy B will be focused on necessities so if someone wants to try selling
stylish hats or perfumes or garden ornaments or meditation lessons maybe we
will think it is important to preserve the freedom to do so, within limits set
by resource availability and social welfare considerations.

Note that for most
of us most of the economic phenomena that concern us would occur within the
town Economy B. Very little that
most of us would need would have to be imported into the town.

5. THE LARGE MONEY-LESS DOMAIN;
FREE GOODS

It is likely that most
of our goods and services will come
free
from close to where we
live, from the two extremely important sectors of the economy
which will use little if any money.

Sector 1. The household.

Much production
will come from the household/subsistence sector, including home gardens,
poultry, making things, preserving and bottling, home workshops, hobby
production, craft, wearing things out, sewing, repairing, entertaining É items
for direct use, swapping, barter and giving away. The multi-skilled handyman
will be highly productive in the house and garden and in the neighbourhood, enjoying making, growing, fixing things much
of the time.. There is nothing remarkable
here. These are the kinds of things grandma did, and they can make a big
contribution to meeting everyday needs and can cut huge amounts off supermarket
bills and the energy they involve.

Many basic
necessities, such as energy and water, timber, craft materials, and many basic
foods (fruit and nuts from orchards, dairy, timber, fishÉ), and many services
(e.g., health care, aged care, libraries, education, fire brigades,
entertainmentÉ), would be largely provided from the commons and the community
cooperative
factories
, institutions and events. Committees
and working bees would do the decision making, management and work, and the
output would be made available to all totally
free
to be taken from the
fields, orchards and stores as people need (like going to school or to the
doctor on a Kibbutz.) All would be expected to put in at least a set
number of hours per week (thereby paying some of their tax) and there would be
rules governing access to these free products and services.

Participating in
working bees would be enjoyable and attractive, but if an honour system didn't work out too well then token
wages
might be necessary to record
inputs and thereby determine shares of produce
earned
. In general in
small, familiar communities people would know if you were unreliable so concern
for reputation would probably get most people to pull their weight. Similarly,
eventually it should not be necessary to record who consumed what, because
people would not be likely to take more jumpers, fruit, mud bricks, herbs or
water than they needed.

Many of these new
enterprises
would function like the
chicken group
on a
commune. These people take on the task of looking after the poultry,
doing the necessary
work
and monitoring, and supplying the community with
eggs, without needing any payment. They do these things because they are
valued contributions, they are enjoyable, and they provide the
workers
with
eggs etc. too. Meanwhile other groups would be looking after the
production of other things these people then get
free
.
Membership of different groups would be voluntary and could be changed as
people wish. Serving on these cooperatives would reinforce familiarity,
community and the sense of collectivism.

The household and
local cooperatives/commons sectors involve
subsistence
production,
i.e., they involve people in producing to meet their own needs directly,
without selling produce. Subsistence production has always been crucial,
and in the coming era of intense scarcity it will be very important. (It
is not confined to within a family; a town can share subsistence production,
and it can involve selling as a means of exchange, but not in order to
accumulate profits and wealth.) Yet conventional economists despise
subsistence, regard it as at best a relic of primitive economies, and they work
hard to eliminate itÉbecause it is axiomatic to them that
real
economics has
to be about selling produce in a market, getting money and purchasing.
Real
economics is not about producing to meet your own needs.
Real
development for the third World therefore can't be about people producing for
themselves much of what they need independent of the global economy.
Central to Simpler Way thinking is providing for yourself as much as you
reasonably can as a household, a community, region or nation. This cuts
resource costs and importing, makes you more independent of distant economic
forces and therefore more secure, and reinforces your sense of competence,
solidarity and power.

The household and
cooperative/commons sectors would provide maybe 3/4 of the goods and services
the average person would need. Some people would have just about all
their needs met from these two sectors, but others, such as those professionals
who do specialist work all the time might choose to buy more than most from the
present case economy, because they would not have time to give to working bees
etc.

The
inevitable tendency!

It is very likely
that soon we will rather automatically and inevitably come under great incentive
to build these
household/subsistence and commons sectors -- when petrol becomes scarce. We will have to do this if we are to cope
adequately. People will probably realise that
they must get together to organise the provision of
basic needs from their locality, and that they cannot leave this to market
forces. This will focus attention sharply on basic necessities such
as food and energy, and on collective strategies. Things will not be organised well unless communities manage to discuss and work
out what's best for the whole, and take control over the re-development of
their neighbourhoods. They will have to focus on the
common good and ask themselves questions like,
What productive ventures do we
most urgently need in this locality?
Do we need a baker, a bee keeper, a fish
farmerÉ?
What sites could be turned into gardens?
How can we recycle nutrients to our gardens?
What
energy forms can we collect here and how?
The solutions will mostly
be public, not arrived at by private individual households. Neighbourhoods will take the initiative away from councils, although these will have to go
with the surge, dropping the rules presently inhibiting local productivity,
such as prohibiting poultry in cities. Councils would have no chance of planning
and administering all our little neighbourhoods,
especially in an era of scarcity, and when we will have to cut the amount of
professional government dramatically.

However it is by no
means inevitable that the desirable new local economies will emerge just
because the old systems increasingly fail to deliver. It is in fact more likely that there
will be descent into chaotic breakdown and thus fascist rule as the rich
endorse state repression to restore order. (See The Window...) We must
work hard to make sure these incentives for local development are turned into
satisfactory outcomes.

6. THE
ECONOMY BEYOND THE TOWN OR SUBURB.

The foregoing
discussion has been about the development of a new town or suburb economy,
Economy B, within the old one. At
first and for a long time it would only be able to provide a limited range of
goods and services, but eventually we would have established participatory
control over the town's internal capacity to meet several crucial needs. But how will the many firms and
systems outside the town have to be organised, and
how might this be done?

Remember that the
total economy will involve no growth and a far lower amount of producing and
consuming than there is now. It is
difficult to see how this could possibly be a capitalist economy. Capitalism is in trouble if the
rate of increase in producing and consuming slows, let alone is zero, let alone
if GDP must be 90% below what it is now. Remember there would be little trade, globalisation or finance industry. Leaving aside the very difficult
question as to how a relatively smooth transition to such an economy might be
made it would seem obvious that the biggest enterprises and functions, e.g.,
railways, steel, telecommunications, hospitals, drug companies, prisons etc.
would be publicly owned and run to provide basic goods and services we all
need. This is not that
radical a proposal because it was the situation until about 1970 in Australia,
before the neo-liberal takeover, although in future we would want far more open
and accountable
managerial
arrangements enabling direct public control.

Now, how best to organise the remaining firms, the many small and medium
privately owned firms employing workers? (These are different from the very
small enterprises, such as family businesses, and cooperatives
which can be large, that are owned by the people who work in them.) This is the gigantic problem that has
faced all people interested in how
socialism
might best be organised, and it would seem insoluble unless there is a
powerful and ruthless state willing to expropriate, kill off firms and
reallocate. But this is another
area where the coming and novel era of scarcity is a game changer, completely
upsetting previous thinking. The
point here is that we are going to have an economy which has only a small
fraction of the present amount of producing and consuming going on...either
because we have the wit to see that we have to set this kind of economy up for
sustainability, or because the coming scarcity will cut us down to it whether
we like it or not. When the
resource crunches hit, accompanied by the financial collapses, very many and probably most firms will be
automatically eliminated, starting with those producing the least necessary
goods. The biggest problem will be whether we can organise relatively smooth transfer of the large numbers of people from the dying firms
to the new crucial local ventures.

It is conceivable
that the remaining medium sized privately owned firms could go on being
privately owned, employing workers for wages, and delivering profits to
shareholders who need do no work in these firms, but this would not seem to
make much sense and it is not likely that this would be accepted in a situation
where scarcity, cooperation and frugality were recognised as paramount. At some stage people
would probably see the sense of converting these firms to public ownership by
the town, to be run to meet needs and not to produce what owners will think maximises their income. It is possible that most transfers
from private to public ownership would be voluntary, as was often the case
during the Anarchist period in Spain in the 1930s.

It will be very
important for all towns, suburbs, regions to have sufficient export capacity,
i.e., firms, to produce (a relatively few) things to sell to
other towns and regions or into the national economy in order to earn the money
to import necessities from them. It will probably be desirable to have two currencies to facilitate the
accounting, one for use within the town and one to enable tracking of whether
the town is paying for its imports. (Keynes stressed that trade between nations should be balanced so that
neither excess earnings of debts accumulate, and that a special unit of account
should be used to track the situation clearly. The crisis in Europe in 2008-12, and
concerning Greece in particular, is largely due to the failure to follow Keynes
on this issue...some win and take all and others cannot compete and pay their
way.) This task of distributing the
export earning capacity properly across the nation would be a major function
for the remnant state and national governments. Some towns and regions could easily specialise where necessary, e.g., mining in desert regions
and not producing much for themselves but paying for their increased imports
from the nation using national currency earned from their mineral exports to
it.

7. QUESTIONS, PROBLEMS?

But what about work motivation, efficiency, and innovation?

The most difficult
challenges for the design of a new economy are found where the old one seems to
be most powerful, i.e., in the market system's capacity to adjust supply to demand,
and to provide incentives for work, efficiency in production, and
innovation. In the present system where all must compete in the market,
where you can be trashed for failing and many are, where many get their income
from investing, and where there are lucrative rewards for those few who do win,
it is not surprising that people work hard, constantly strive to cut costs and
to produce cheaper products, and are always looking for new ways to make
money. All this is very effective in providing cheaper goods for
purchasers, and new products. It would be difficult to exaggerate the ferocity
here, the unrelenting effort these forces get out of people, to work, climb the
company ladder, build corporations, take huge risks and innovate boldly.
The conventional economist insists that the market cannot be replaced as the
efficient driver of all this.

The first important
point to make is that there is at present far too much work, effort, production
and innovation! It is causing most of the world's problems. We need an
economy in which only a fraction of the present turnover occurs, many good models
are kept in production without change, and in which there is only sufficient effort, innovation and
efficiency. So it is a major mistake to see the problem in terms of
replacing work motivation by non-market mechanisms that will have the same
effect, i.e., drive the present manic consumer economy.

But we do have to
make sure there is incentive for producing, making things efficient, and
developing new ways and products. How might we do this in the long term future when we have got rid of markets and profits?

Again it is
important to keep in mind the new conditions that will help us. The
situation will require and reward more
cooperative behaviour and simpler lifestyles.
In addition the new economies will be small and much less complex, and without
growth and therefore the economic task will be far less difficult than it is
now.

Let's look at the
sub-problems one at a time.

a) Adjusting supply to demand

The great merit
claimed for the market is that its hidden hand quickly, effectively and
automatically adjusts supply, demand and price, and that it would be impossible
for planners to try to make the millions of decisions involved. But this
is misleading and largely incorrect. In the present economy supply is in
fact adjusted to demand by millions of deliberate, rational decisions, taken by shop keepers and corporation production managers,
responding to inquiries by consumers. The problem is not that rational
systems could not process the millions of signalsÉbecause that's what happens
now.

Where planned
economies have failed in the past is at the level of the response of the
production managers and of the factories that have been told by central
planning agencies what to produce, or not given enough resources by those
agencies, or have had no incentive to be efficient and sensible in production.
In the USSR the nail factory would be told by the central planners to produce x tonnes of nails next year, so they would produce X tonnes of tacks if that was the easiest option for them. It
is not obvious why these problems cannot be solved by a) computerised systems which provide precise, quick, detailed information on what is asked for
by people who come to shop counters, b) completely visible systems whereby all
people can see what information managers have and whether they are proceeding
sensibly, c) control of policy and decision making by participatory systems,
not bureaucracies, so that the people have the power to observe and intervene
if their local fridge factory or bakery is not functioning well. (These
conditions, especially the advent of computers seems to eliminate the problem Novefocussed on in The Economics of Feasible Socialism; i.e.,
difficulties in communicating information re millions of demands.)

In any case it is
likely that workers and mangers would want to run a good regional fridge
factory, given that they can see how this directly benefits their community.
The smallness of scale has synergistic effects, via the morale that comes with
small cooperatives and communities. Conventional economics fails to
grasp any of this since it only attends to the dollar value of inputs and
outputs.

b) Work motivation.

This should not be
a significant problem. Firstly consider the household and commons,
Sectors 1 and 2. At present there is not a problem getting people to work
in households (where at present more than half of all the work in our economy
takes place.) In general people will want to do what is necessary to run
their household economies well, and they will enjoy this, because these economies
will be more complex and interesting than they are now (poultry, vegetable
gardens, preserving, crafts, more people around all dayÉ)

Similarly at the
local community level people would turn up for
the (maybe entirely voluntary) working bees well because a) they knew their
welfare depended on keeping the windmills and orchards in good shape, and b)
they would like doing those things, because they would be enjoyable and
would bring the feeling of making a socially worthwhile contribution.

When it comes to
working in firms in bigger firms, e.g., the railways, it would seem to make no
difference to motivation whether the firm is publicly owned or privately
ownedÉbecause in the present economy it makes no difference. But in
the new economy there would be the added force of knowing you were contributing
importantly to your locality's welfare.

The work people did
in factories would be under conditions that would be far more pleasant than at
present. A high priority would be to organise the work place to make time spent there a satisfying part of peoples'
lives. The pace would be relaxed, the hours
short, and the workers would participate in running the place. There
would be no pressure from bosses to maximise output
and no threat of getting sacked. (Of course there would have to be
procedures for dealing with workers who were lazy or incompetent.) People
would have a sense of making a valued contribution. None would feel they
are wasting their time and talents producing frivolous products.

Efficiency and
effort would firstly be the responsibility of the workers through their
informal and formal procedures for running the placeIn general it is likely that the team would take a pride in these functions, being
aware of how important it is to make work places pleasant and to provide
products their communities need. These forces typically make cooperatives
very efficient. In addition the operations of their factories would be
open to observation by outsiders, informally and formally via monitoring by the
local committees which would be watching things such as the
way firms and other local institutions and systems were working (below).

c. Efficiency.

The above
discussion largely covers the important issue of the efficiency of enterprises,
and of systems, and institutions such as the cooperatives recycling our waste water.

In general people
running their own little firms serving their community are going to want to do
the job well. Their performance will be highly visible and their
contribution will be a source of respect and appreciation. They will get
satisfaction from providing things that enrich the lives of their friends and
acquaintances. If they became a bit sloppy people would politely tell
them, or ask if there are problems they could help with. In all these cases the very small-scale
means people would be working mostly for the benefit of their own
communities. This is quite different from being a tiny cog in a gigantic, bureaucratised water system that serves millions of
people you never see.

Hence the economic
significance of comradeship! Conventional economists, who have no
interest in anything but dollars, totally fail to grasp the immense economic
significance of morale. How well anything works is 95% dependent, not on
pay rates or CEOs, but on how enthusiastic people are about what they are
doing. Consider the cafes or bakeries run by people who just love their
little enterprises, the beekeepers and spinners and potters who want nothing
more than to practice their craft, the mother who works furiously to help a
sick family member, the peasants who enable impoverished guerrilla armies to
defeat great imperial powersÉor the footballer who works about as hard as
possible. Think about how much could be produced in the 28 hours a week that
the Average American is watching TV each week, if people were mad keen
gardeners or carpenters or artists.

The new villages of
The Simpler Way will be crammed with people who are enthusiastic about
producing vegetables, goods, plays, events, landscapes, feelings of
solidarity. They will not work because they have to. They will not
have to work at jobs they do not like. They will work in pleasant
conditions. They will do things they like doing and that are
valued. They will work with comrades on interesting and valued
cooperative tasks. They will know their input is important, they will see
their work benefiting others. They will know they are part of a social
system that one can be proud of. This situation would surely more or less
double the productivity of the average worker today, and of the average
firm! People will be inclined to work hard when that's appropriate and
they will conserve materials, look after machinery, think about better ways,
run good meetings, do more than the minimum required, and help their
co-workers.

d. Product
innovation and setting up new firms?

These are the
crucial problems. The present economy is very powerful here, ensuring a
constant blizzard of change and innovation, motivated by the prospect of huge
profits for the successful innovator, or bankruptcy if a competitor gets there
first. How can we make sure sufficient incentive remains as we reduce the
market elements of the economy?

Firstly we should recognise again that at present there is far too much innovation!
The business world is in a constant frenzy of desperate competitive search for
new products that might enable some firm to take the sales others had.
Most of the innovation taking place today is
unnecessary, trivial and wastefulÉand socially undesirable, e.g., fashion
change, new advertising campaigns, new models, phones that can take
pictures. And there is too much change; we need more stability and
certainty. But what about valuable new ideas and how might they be
put into production?

The problem is not
innovation in the sense of invention or coming up with new ideas. People
who are keen on electronics for instance, both within firms and as hobbyists,
are always tinkering; they love innovating. Corporations don't innovate;
the scientists and technicians they employ do it, and they do it just as
enthusiastically within public as private institutions. Most and the best
innovators work for a set, and relatively low wage; i.e., they are
academics. In the new economy there
would be more time and resources for innovation than at present, within our
firms, within our special R and D institutions and among the many expert lay
persons within the town who would have the time to think and experiment.
So coming up with the innovations would not be a problem in an economy without
any elements of the market mechanism. So what is the problem?

The problem is to
do with the investment decisions, e.g., to set up a firm to produce the new
product. Who would take the risk involved in starting a new venture and
why would they go to the trouble?

Firstow let's cut the risk issue down to
size. We will not need venture capitalists to take on big risks for big
rewards, thereby doing us the heroic service of bringing new products that no
one else was brave enough to create. Risk will either be eliminated or
spread across everyone. For instance, if the town could see that a lot of
effort would be needed by one of its firms to get some promising but uncertain
new idea to the tryout stage then the town could decide whether the risk, the
investment of funds, resources and working bees, was worth the probable social
benefit. No single entrepreneur needs to take on this risk. (Note that
when entrepreneurs fail they do not just waste their capital; they waste our
resources, energy and time and these could have been put into other projects.)

The approach being
discussed is similar to the astoundingly successful Mondragon cooperative
project in Spain. In that city anyone who thinks of a new product can go
to the town bank and business incubator and discuss the proposal with a panel
of the town's experienced business people. If they think the venture is
viable they go to the town bank to arrange credit, loans or grants to get it
going. One big advantage in our new economy is that the bank would ask more
than,
Will this maximise profits for us?
. The innovator is not dependent on whether some
bank or venture capitalist thinks the idea will yield big profits. It is
possible that a socially valuable venture that might not make much if any
profit will still be funded. It is clearly much better that the town bank (and townassembly with difficult cases) has the final say on
whether a potential firm will be funded than that some private bank has the
sole power to decide this.

The setting up of
new firms in this way is most easily envisaged at the town level where the
people might realise that they need a shoe repairer
and simply use their own bank, business incubator an working bees to get one
going, but it is no less plausible that a region might establish large
factories such as for fridge production in the same basic way. If a need
becomes apparent, or a new product is thought of, public discussion and decision making processes could determine whether it is to
be produced.

This is also one of
the important functions for the remnant
state
; i.e., contributing to the
planning needed to ensure that the very scarce resources available are invested
mostly in setting up essential industries and locating them so that all towns
have a share. Again such proposals
should be decided on by votes within all the towns, not by power given to
central bureaucracies or representative government.. (Planning is not the problem; almost everything needs to be thoroughly and
carefully planned. The main problem
has been that a few central bureaucrats have the power to do it and enforce it,
as in the Soviet Union...or that it is all done within corporations.)

e. What about sophisticated
R and D?

The Australian
Commonwealth Scientific and Industrial Research Organisation and the Commonwealth Serum Laboratories were excellent examples where salaried government scientists worked very effectively on
socially valuable R and D for agriculture, industry and medicine. There was no
problem getting very conscientious and first rate effort out of these people, researching in their pet fields and coming up with
valuable ideas.

There is no good
reason to think that high tech research is done more
effectively by private corporations. It is better to have it done
by public institutions because then we can make sure that the right projects
are worked on, whereas corporations will only work on the most profitable
possibilities. This is glaringly evident with respect to drug research and
innovation. Less than 1% of new drugs developed are for Third World
diseases, while the giant and fabulously profitable drug companies bring out an
endless stream of trivial products like cough syrup and wrinkle creams for rich
world consumers. For instance Malaria is a disease
which kills millions in the Third World every year, but hardly anyone in
rich countries. Therefore drug companies have ignored researching
it. So in general we would get more socially desirable R and D if the
institutions were publicly owned and run.

We would need
fairly elaborate planning and coordinating agencies and systems to constantly
study proposed innovations and developments. These would consider what
various regions need and how best to spread factories around, and what
revisions to existing arrangements seem to be appropriate. They would have the
responsibility of constantly watching how things were working out. We have
these kinds of institutions now, e.g., in deciding Commonwealth Research
Grants. (See below on monitoring
and feedback systems.).

Remember again the
crucial point that we would make sure that all these deliberations would be
completely open to observation and input from the public. Ideas and
critical feedback from the many ordinary citizens eager to help think out the
best technical ways would be welcomed. Again it is important to recognise that the climate will be cooperative. There
will not be competition between regions trying to beat each other to
get
the
steel works etc. There will not be fierce competition between firms to take
sales from each other. Everyone will understand that the economic problem
is how to organise our combined productive capacity
to produce those things we need for a good life, efficiently, sustainably and
enjoyably. All regions would know that the point of the game was to share the
location of such things so as to maximise the overall
welfare. All would be able to observe and contribute to the
deliberations, and all would know that they were highly dependent on each other
and so they could not prosper unless all others were doing so. They will
not get the steel they need or the buses unless the towns near those factories
are working well.

This climate of
mutual dependence, assistance, openness and cooperation would also greatly
assist the functioning of our institutions. In the present adversarial situation bureaucracies are open
to attack by parties who do not get what they want (at the expense of other
parties), and therefore they have strong incentive to be secretive,
authoritarian and not to admit mistakes. The new situation would take
this pressure off administrative agencies, along with the fact that they will
only be the administrative and planning agencies, not the ones who make the
decisions and are then open to criticism if things do not work out well.
Again all the town assemblies will make the decisions, sometimes via national
referenda on national issues. (In
some regions such as Virginia and Switzerland people frequently vote on long
lists of specific and separate proposals.)_.

But isn't this an almost fully planned economy?

Unfortunately the
dominant neo-liberal ideology has convinced everyone that
Éeconomic planning
is seriously mistaken, and everything is best left to free marketsÉIsn't that what the collapse of the Soviet Union showed?
It is important to recognise firstly that the present
economy involves a huge amount of planning. Markets do not
adjust supply
and demand automatically, via a hidden hand.
People within corporations
do it, rationally and deliberately and meticulously; i.e., they plan changes in
production in view of their incoming information on demand, costs, etc.
They carefully adjust inventories, deal with complaints and faults, and bottlenecks,
and note suggestions for new products. As Galbraith pointed out long ago (The New Industrial State) nowhere is more
elaborate and thorough planning of production and change to be found than
within corporations. So to start with it is not obvious why it is in
order to have these rational, deliberate processes take place within private
corporations but not in order to have them carried out by public agencies
(Éthat are open and participatory, and not large or centralised,
or authoritarian bureaucracies, and that can use elaborate computerised information systems.)

Consider government
owned rail services at present. These are run by boards
which more or less adequately maintain efficiency and innovate now and
then, and are (to some extent) open to public feedback. Why can't the supply of
nuts and bolts, steel and fridges and radios be effectively organised through similar processes? This is the way we did many important things a
few decades ago (e.g. governments ran airlines, shipping, telecommunications,
arms factoriesÉ), effectively enough, and in the new economy we will have much
better procedures, more open to public scrutiny, and a much simpler overall
economic task.

8. MONITORING, MEASURES.

In a satisfactory
society there must be constant effort on the part of all citizens to observe
and think critically about how things are going. At the level of the town
people will always be chatting about how well things are functioning and what
changes should be tried. But we will also have extensive formal systems
for collecting, digesting and making information available. We will monitor all
sorts of issues, including resource consumption, the state of ecosystems, the
situation of the aged and of youth, the quality of life, and our resource and
ecological footprint. We would have important committees from town to national levels,
most of them made up of volunteers collecting and sieving this information, and
reviewing its significance. Most of the auditing etc. would be computerised and therefore elaborate statements would be
immediately accessible to all, and would be constantly be consulted by
committees and ordinary people.

One very important
focus for this process would be the efficiency of our firms. In addition
to the powerful role of informal feedback here, (
A bit too much cinnamon
in the Easter buns this year I thought, Jack
), we would develop
procedures for monitoring efficiency, supply and demand, and possible and
required innovations. If our baker was much less efficient than those in
other towns we would suffer so we would have an interest in knowing how well he
is performing compared with others and in helping him lift his game if
necessary. The spirit would be positive and helpful, not punitive.
The goal is to help our firms perform well enough and this might require loans
from the town bank, courses, or working bees to improve the shop.

Especially
important would be indices of the quality of life. Some of these would be
objective measures, such as rates of illness, crime and depression, and some
would be subjective, such as how contented old people were. We would
experiment with indices of social cohesion and solidarity and the general
quality of our
civilization
. There would probably be no sense in trying
to combine these into a single overall index. We would not give much attention
to monetary measures, because income and dollar costs would not be important
determinants of much that mattered, especially the experienced quality of
life. Real welfare would be a function of local organisation,
collectivism and spiritual energy, not monetary wealth. No attention would be
paid to any measures of GDP.

There would also be
elaborate global communication networks focused on this task of monitoring
practices and performances at many other sites around the world and enabling us
all to be well informed on how well different approaches worked out, and how
well our firms and organisations were performing
compared with others. One of the most important domains would process
information on plant varieties enabling selection of those most likely to
perform well in particular local conditions and provide inputs to food,
chemicals and materials production. Another would watch different
procedures for measuring ecological footprints, and report on reductions
achieved in different regions. We would also be able to see how well
political, social and quality of life goals were achieved in different regions
and countries, and to quickly share new ideas and ways.

Another important
domain for research, reporting, experimentation and debate would be how best to
run communities on participatory democratic principles. We will be on a
very steep learning curve here, because we have had no experience of this
before. It involves many crucial and mysterious skills and processes,
such as how to make sure people express their wishes and reservations well
(because if we opt for a project some do not like but didn't say so it will not
work so well), how to criticise an idea without
giving offence, how to handle conflicts, how to defuse and avoid power
relations, how to create solidarity, cohesion and morale?

Crucial would be
ways of organising information so that we can quickly
get access to the summaries and overviews which enable us to easily form a
sound grasp of a situation or public issue. The writing up and
maintaining of these issue and situation summaries would be a most important
function. It might be handled by laypersons, along the lines of a
modified Wikipedia, although it would not be difficult to add oversight by
experts and specialists where necessary. All this should easily be done. It would be most important
in facilitating participatory democracy because it would allow citizens to be
very well informed on the state of issues. (One of the main reasons for
apathy now is that it is impossible for the individual to understand issues,
especially given the vast
Public Relations
industry that
corporations and governments employ to deliberately obfuscate and spin in order
to prevent you from understanding what is going on.)

9. MONEY, FINANCE, CAPITAL

Money.

One of the most
absurd and damaging aspects of the present economy is the money supply
system. (See.) Early in the period of transition to The
Simpler Way local communities will begin creating their own new money systems
and currencies . This will be important in
enabling production and exchange to take place among people who have no
official money. This
new money
is best thought of as IOUs. We will
simply organise people who previously were idle and
poor and without money to start producing things and selling them to each other
using a form of IOU. This money just enables us to keep track of the
value each person has created and given or received. It will enable
producing and selling by all those who were previously cut out of normal
economic activity just because they had little or no normal money. This
is how the new Community Development Cooperatives will get economic activity
going around community gardens and workshops. (See The Transition
Process.)

However when The
Simpler Way has been established there will be no need to issue new money,
because it will be a stable, zero-growth economy with no increase in the need
for money to buy increasing quantities of production. Banks would be little more than secure
places to keep savings, although they would be involved in enabling investment
in the renewal or restructuring of the more or less fixed amount of capital
stock.

It will probably be
a good idea to have a separate currency for the relatively small amount of trade
the locality engages in, so that it is always quite clear how this is balancing
and whether more needs to be supplied to others to pay our way.

There would be no interest paid on loans.

A sustainable, steady-state society cannot have interest payments. If there is interest then there is un-repayable
debt. More importantly, if there is interest there will be a growth
economy. It is not possible to have a system in which more is paid back
than was lent unless there is growth in output all the time.

In the near future
all money would be created and issued, not by private banks but by public
banks, mostly at the local level. Loans would be repaid plus only a fee to
cover administrative costs.

Debunking
capital
.

In the present
economy capital is overwhelmingly important. Nothing can be developed or
produced unless capital can be borrowed from the few who own or control it, to invest. In our new local economy the situation
will be quite different. Firstly in a zero-growth economy the only
development
taking place would be the replacement of
the existing stable stock (or revising its composition), and little of it will
be high-tech mega-buck projects. Infrastructures would mostly be simple,
for instance all buildings would be made from earth. More importantly, in
general all that will matter is whether the
town has the resources that are necessary to develop what it wants, such as
the timber, labour, mud, land and skill. Every
town will have plenty of these in its people and its commons. So if one
decided to build a new hall or premises for the shoe repairer, it would use its
own materials and labour via working bees, and might
thus end up with the development it wants without having to raise any capital
at all. If a few things need to be paid for in advance, the money would
come from the town bank. (The town might have to import some inputs from more
distant regions.) Obviously regions
and nations are in an even better position to do such things because they have
more resources within them to draw on. Thus the present taken-for-granted
dependence on capital can be seen to be a vicious myth, and a bonanza for the
rich, since it means that instead of doing many things for ourselves without
borrowing capital, we go to them and maybe pay them twice as much as it would
cost us for the development even if we had to buy the inputs with money. Thus
in the new economy there would be only a small finance industry.

There will be
little need for the
retirement industry
or for financial planners. Security in old age, a guaranteed income, access to all community
activities etc., and a continuing valued role, will be ensured by the community (overseen by the relevant committees). Old people will continue to
work
as much or as little as they wished, they would be able to remain in their
homes much longer, cared for by family and friends (who would tend to be close
because there would be much less mobility.) We would therefore need few
special premises or professional carers, and
therefore little professional aged
care
. People would be much
more secure in old age than they are now, as they
would not be dependent on the honesty or skill of their fund managers or the
treacherous stock market.

It is evident
therefore that development is primarily a problem of organisingexisting productive capacity. Going to capitalists for money
to buy inputs is one way of getting the process organised,
but in general there is a far better way.

10. SOME OTHER ISSUES.

Economic
affairs would cease to be very important.

After the
transition to The Simpler Way is complete becoming rich will not be very
important to people. They will have been liberated from the fierce
struggle to work, produce, compete and sell, and acquire wealth. These
will not be necessary for security or a good quality of life, and there will be
other more rewarding purposes to devote one's time to.

We will easily organise the production of the goods all people need for a
high quality of life in materially simple ways and at a relaxed pace. We
could then spend most of our time engaging in activities such as arts and
crafts, gardening, domestic and community activity, cultural pursuits,
learning, playing, and enjoying life. The producing we engage in will be
enjoyed because most of it will take place in craft ways, in households and
gardens and in cooperatives and on working bees. In our firms we would
have the sense of producing to provide what others in our community need and we
would mostly see others benefiting from what we had done, e.g., when we make a
table for someone or deliver eggs or drop in to chat with an elderly person.

People would
increasingly realise that they could have a high
quality of life without needing to strive for high incomes and wealth.
Again the economy will come to be seen as just a system which we all contribute to in order to be routinely supplied with the relatively few
things that are sufficient to meet our needs, so that we can then get on with
more important activities, such as rehearsing for the next dramatic production.

The
implications for Third World Development.

At present
conventional development theory and practice are failing to bring about
satisfactory development for billions of Third World people. This is to
be expected when development is conceived only in capitalist terms; i.e., as a
process whereby those with capital invest it in order to make as much money as
possible. Good profits can't be made developing what is most
needed. The productive resources of Third World countries are mostly put
into developing industries to serve the rich. Most of the country's productive
capacity benefits rich countries and their corporations, with little
trickle
down
to benefit the poor majority; in fact tyhe resources under their feet that they could be using are exported. If no
corporation can maximise its global profits doing
something in a particular country, then there is no development there.
Conventional development is therefore a form of plunder. (See Third World
Development.)

The tragedy of
development
is that in any country there is immense productive capacity which
only needs organising so that
people can get together to produce for themselves most of the basic
things they need for a reasonable quality of life, trading only a few surpluses
in order to import a few necessities.

The Simpler Way
enables even the poorest countries to work miracles via appropriate development with very little capital, using mostly local
land, labour and traditional technologies, preserving
traditions and ecosystems, and avoiding dependence on foreign investors, loans,
trade or the predatory global market. This is not possible unless the
goal is non-affluent but adequate material living standards, within highly
self-sufficient and very cooperative local economies.

The core concept in
appropriate development is the application of existing
resources and productive capacity directly by the people to meeting their own needs collectively.
Consider workers being paid 15 cents an hour making goods for export, which
they then have to spend on food etc. sometimes imported from rich countries. Clearly it would be far better for them if they
could devote their time to cooperative work in their own households, little
farms and firms and community organisations, using
local resources to produce basic necessities. (Four hours
work
per person per week in well -organised cooperative gardens might feed a family -- 60 cents will not!) In
principle therefore the dreadful problems of Third World poverty and
deprivation could be very quickly eliminated, but only if conventional economic
theory and practice were scrapped.

Appropriate
development would of course be a catastrophe for the rich
countries. Third World resources would be being
used by Third World people, not exported to rich countries. This
is why rich countries and their agencies such as the World Bank prevent it from
occurring.( For the detailed account see Third World
Development, and Your Empire.)

Stability and Security

People will have
stability in their lives and work. They will not have to fear globalisation forcing them to change their jobs and retrain
several times, or dumping them into irrelevance before they reach fifty.
People will be able to gain satisfaction and respect from accumulating wisdom
through a lifetime.

A local economy
involving many relatively
low
technologies, simple systems, and
many handymen is highly secure compared with the fragile dependence of modern
society on distant, complex mega systems, distant experts with unintelligible
skills, distant investors of capital, and a treacherous distant market that can
cease taking your exports at any time. In the Asian crisis millions of
people suddenly had their lives devastated by events in capital markets far
away. In consumer society ordinary people can't fix anything. In the new
town economies most people will understand and be able to fix just about any
problem in the power supply or the grey water recycling system or the
windmills, because these will be technically simple and we will all know about
them from our experience on the working bees. Children will learn how to
repair pipes and taps by helping out. Many people will have accumulated
considerable experience in designing, building and maintaining all our local
systems. We will not be dependent on computerised spare parts from some overseas corporation let alone hick-ups on the Hong Kong
stock market. The community will be able to instantly identify a problem,
e.g., a dam leak, pest outbreak, storm damage, and quickly
fix it through cooperative action. All can turn out in minutes to
deal with emergencies. Working bees can be quickly organised,
or committees be set up to work on a problem. So even catastrophic breakdowns
in the global economy or our own region are not likely to cause us much trouble.

Inequality.

...would not be important. Redistributing wealth and income is usually seen as crucial in bringing
about a better society, but this is another issue on which thinking changes
dramatically when the coming conditions of scarcity are kept in mind. Your
quality of life will not depend at all on how wealthy you are. It will depend entirely on how well
your town works, how well it provides you with good food, conversation, great
musicians and picnics, access to art teachers...and your reputation as a good
contributor. Eventually
people will realise that these are the sources of
security and a rich life. People
will be able to live well with very little monetary income, and they will cease
caring about wealth. (It is well established that even in our present consumer
societies, above a low level of income increased income makes little or no
increase in experienced quality of life.)

From
getting to
giving

In the present
economy all must strive to get. We work to get money, which we must have
to get goods. Corporations strive to get markets, sales, profits. Individuals are out to get as much for
themselves as they can. In addition to the fact that such a system
results in some getting far more than others, this selfish
getting
morality is
not satisfactory,

In the alternative
economy sketched the dominant principle is giving. This is the situation
at present in the household economy where people produce and give to the
family, without any thought of payment, because they want to provide for each
other. They know that they will have their needs met by the giving others engage in.

Giving is the
principle that drives tribal economies. In New Guinea food is not
produced to eat. It does end up being eaten but it is produced to give to
someone in accord with elaborate rules of obligation among kin.
Exchanging things for money establishes almost no social relations. You
do not feel grateful or indebted or obliged to reciprocate. The exchange
is balanced, finished. But when things are given there is unfinished
business, enduring feelings and obligations to reciprocate. Giving
therefore establishes and reinforces social bonds, cohesion. Friends do
things for each other without tallying who owes what. They give because
they like assisting each other and a long history of relating this way binds
people together. How well our new communities work will depend on how
much solidarity there is and the practice of giving will build this, including
giving to working bees, to concerts, giving surpluses away, and giving
assistance.

Giving has
synergistic effects, but selling in a market doesn't. Giving makes the
giver and the receiver feel good and therefore more likely to behave nicely to
the next person they meet. So when you give something away you might
actually become richer. Goodness and generosity multiply goodness and
generosity, whereas beating someone in competition is likely to be worse than a
zero-sum game. The beaten party is likely to be grumpy, and the
exchange will have reinforced suspicion and predatory attitudes on both sides.

It is probable that
some day we will have an economy in which we work and give our products to others via community warehouses, without wages,
and then take from those stores all we need. This is more or less how
households work now, and how the Kibbutz economies work. In some rich
countries people work and pay (give) tax and then go to the doctor where care
is given to them without paying. So it might not be very different if all
production and consumption was organised in this way.
The necessary monitoring and planning would be easily organised;
maybe next year we need to produce a few more jumpers and less tomatoes... This is termed the
Gift Economy
.

The terms that captures the alternative ethos are generosity and nurturing. There are
heaps of these in any good family or community. People give generously to
each other, without expecting a return and without calculating their
trade
balance
. We want to do things that enable others to enjoy life, thrive, grow. Generosity
has powerful synergistic effects; it makes you feel good and it makes others
generous and happy and therefore likely to stimulate positive chain-reactions
with others. Contrast this with the spirit that permeates the present
economy, where individuals most constantly seek to maximise their own self interest and advantage by taking as much as they can, where
there is at best zero-sum competition with others, and we have to be constantly
suspicious of the predatory behaviour of others.
No wonder there is little regard for the other, for the public good, or those
who lose out.

A note on the transition.

It is important to
keep in mind the distinction between the ideal way the economy might eventually
be organised in the long distant future, and the
kinds of changes we should try to make immediately and over the next perhaps
two decades. TSW approach assumes
that the transition could be made slowly
and with little or no serious disruption, let alone violence, and that the key
mechanism will be the gradual development of the new local Economy B within the
old economy. We will (have to ) start in very humble ways, more or less as within the
present Transition Town movement, especially developing community gardens. As the normal consumer-capitalist
economy increasingly fails to deliver, and runs into impossible energy,
environmental and financial problems, people will come across to our new ways.

Thus, fortunately,
we do not have to think in terms of sudden, violent replacement of the old system
by the new. We do not have to try
to persuade people to jump suddenly to very different and strange new
ways. The argument has been that
the new society cannot work unless it is based on ways that are local,
participatory and frugal and these can only come to be via a slow process of
learning and development; no
dictatorship of the proletariat
, or benign Scandanavian state can give or impose them. So in the economic sphere transition
will (have to) be about gradually developing and extending Economy B. (For more detail on the transition see
Thoughts on the transition.) Much of the above discussion has been about the
situation we will eventually have got to and it is not being argued that we
must suddenly try to implement these ways.

11. ECONOMIC THEORY,

The skills of
conventional economists and the theory and measures they use would be of little
value in analysing or managing the new economy.
Its principles and dynamics would be almost totally incomprehensible to
them. Conventional theory is only about one
particular type of economy, one in which productive capital is privately
owned, competition in markets is the chosen mechanism for determining what is
produced and who gets it and the monetary value of things is the only factor
taken into account.

Here are some of
the elements in the new economy that conventional economic theory cannot deal
with.

When you give
things away you become richer -- many exchanges are not zero-sum; giving can
multiply goodness and wealth for you and others -- development is mostly
about organising and harnessing existing productive
capacity, not about investing money -- the economy is driven by moral, social
and ecological considerations, not monetary values -- nothing is
determined by market forces -- many transactions ignore market forces or
contradict them -- people don't try to maximising income or wealth -- most production is not carried out for money -- the value
of few things is measured in dollars -- people do not work for money (although
they might be paid some money) -- much work is done for
nothing
--
there is no clear distinction between work and leisure --the supreme value is
collectivism, not self interest -- the GDP is ignored -- the quality of life is
the supreme economic criterion -- there is no growth -- there are no interest
payments -- some taxes are voluntary -- many goods and services are free
-- subsistence is a large sector of the economy –the subsistence sector
is the most important one in the entire economy --- effort is made to reduce
production, purchasing and sales as much as possible -- the less consumption
the better -- an effort is made to keep out of the national and international
economies, i.e., to minimise trade -- there is little
international trade -- globalisation has been eliminated
-- wealth has nothing to do with money – the individual's wealth depends
on how well the community is thriving; if it is in bad shape the concerts,
fruit, workshops and conversation will be poor -- there is no unemployment or
poverty -- no firms are allowed to go bankrupt --- many shops open only one or
two days a week – many have no shop assistacts present, just a tin to put your money in -- inequality does not matter --there
are no bosses -- there is no retirement -- there are no advertising or marketing
industries -- there is hardly any finance industry – no interest is paid
-- in the near future people can create their own money but eventually no new
money will ever be created -- human nature is assumed to be mostly altruistic
and generous -- by far the most important
factor of production
is morale --
people don't compete, they cooperate and nurture -- the economy is not
motivated by getting, but by giving -- people don't maximise – the basic economic principle is to give, not to get.

The two factors
most relevant to the development of a satisfactory economic theory are, a)
measures of welfare or quality of life, and b) measures of ecological
sustainability. For instance to try to discuss the wealth of an
individual or a nation in terms of dollars is extremely misguided. It is
clearly understood now that increasing the average individual income in rich
countries will not improve the quality of life experienced. In fact it
now appears that economic growth is reducing the quality of life (because the
growth is being achieved by pushing workers harder, cutting social spending,
stripping ecological capital etc.) Even more important is the fact that
your wealth and welfare ultimately depend on the state of your resource and
ecosystem accounts. At present much of the GDP is due to ripping up and
selling off of ecological systems and resources, i.e., reducing the ecological
wealth or
capital
on which our fate depends. One of the major faults in
the market system and in conventional economic theory is that they do not make
this point evident. It actually encourages the
destruction because it records every sale as a positive contribution, neven those that represent the exploitation, stripping and
selling off of natural capital. However the conventional economist argues
that if this leads to a problem, e.g., a shortage of timber, then the marvelous
market system will correct the situation by increasing the price of timber,
prompting reduced use and replanting, and the use of substitutes. The fault in
this argument is that, by the time the market recognises a problem with an ecological resources it can be too late, the resource might have been destroyed, for ever. This is the situation with tropical forest, which
cannot be regenerated because if the thin soil has been lost the soil turns to
laterite.

Wealth is above all
else a function of the condition of our soils, atmosphere, forests and
fisheries, and our future wealth will depend on whether these are kept in good
condition. An economic theory that dealt satisfactorily with these
factors and enabled us to tell how wealthy we are at a point in time would
probably make no reference at all to dollars, monetary wealth or GDP.

As Herman Daly
says, the GDP measure is only of flows, and
it completely ignores stocks. It's like thinking you are getting
richer by selling the tiles off your roof.

In the The Simpler Way it is not possible to separate economics
from politics, sociology, psychology or ecology. In trying to analyse or manage any issue concerning production etc. we
will have to grapple with a messy combination of considerations and
implications from all these fields and most of them will not involve
money. Usually the only way to proceed will be via community discussions which bumble towards consensus on the policy
that seems most likely to promote ecological sustainability and the long term
quality of life for all.

WE CANNOT FIX THE
ECONOMY UNTIL WE FIX THE CULTURE.

Most people reading
the foregoing proposals for a new economy would probably see them as hopelessly
utopian and unrealistic. They would say people will not follow such ways. This is quite correct. Many of the ways
sketched above would not work in today's society, because they require different attitudes and values to those
most people have now.

Today most people
are out to maximise their self-interest, see nothing
wrong with competitive systems in which they might be one of the winners and a
lot of people end up with less than enough, and would oppose the social
regulation needed to ensure satisfactory outcomes for all. It is
essential to realise that a satisfactory society
cannot be designed for such people! They mistakenly assume that a
peaceful, sustainable and a just world is possible while they go on living
affluently and competitively and continually striving to increase their
"living standards" and GDP. But these are the core behaviours that are causing global problems. In other
words the foundations of our unsatisfactory
economic system derive from fatally flawed elements deep within Western culture,
and it is not possible to get to a sustainable, just and peaceful world unless
we change to radically different ideas, ways and values.

A very important
feature of The Simpler Way that we will be driven towards by the coming era of
scarcity is that it requires and rewards good values. The conditions we will experience, whereby a satisfactory
life in a good community will not be possible unless there is cooperation and
willing contribution and concern for the common good, will reinforce good
values and behaviour. (See Culture and Values; The Biggest Problem, and The Transition Process.)

The patient said to the doctor, "I desperately
need you to solve my obesity problem. I'm suffering very serious effects
now. In fact I'm so over-weight my vital systems are starting to fail.
But let's get one thing straight Doc --- I refuse to stop over-eating -- that's
non-negotiable. Now, what's the cure for my problem?"

Fortunately the
required ideas and values are also to be found as (minor) themes in western
culture, including concern for the other, for the public good, volunteering,
stability, justice and rights, cooperation and helping, and living in harmony
with nature. We just need to restore these to prominence. Obviously
the new economy sketched above cannot come into being until we do this.

If
you insist on

Competing
against all others,
andGetting as rich as possible, with no limitÉ

Then

You will have
the economy of consumer-capitalist society, along with all the problems that will probably destroy us soon.

But if you want an economy in which

We do not
destroy the environment, deprive the Third World, generate resource wars,A few do not
take more and more of the world's wealth, There is not
huge waste, Corporations do
not have vast power, People are
secure and happy, The GDP does not
increase all the time, All have a high quality of lifeÉ

then

People must be
content with frugal self-sufficiency. There cannot be
a growth economy, People must
cooperate and share, People must
value the public good, Giving and nurturing are top priorities.